NeuroPace, Inc. (Nasdaq: NPCE), a commercial-stage medical device
company focused on transforming the lives of people living with
epilepsy, today reported financial results for the fourth quarter
and full-year ended December 31, 2022.
Recent Highlights
- Achieved total revenue of $12.8
million for the fourth quarter of 2022, representing a 16% increase
over the fourth quarter of 2021
- Achieved initial implant revenue of
$9.8 million for the fourth quarter of 2022, representing a 15%
increase over the fourth quarter of 2021
- Generated $1.6 million of revenue
in the fourth quarter of 2022 from the distribution of DIXI Medical
products, marking the first quarter of revenue contributions from
the distribution arrangement
- Completed onboarding all centers
participating in the NAUTILUS pivotal study for primary generalized
epilepsy
“Our strong fourth quarter results were driven
by increasing utilization of the RNS System and initial
contributions from our exclusive U.S. distribution of stereo EEG
electrodes produced by DIXI Medical. We are pleased with our
commercial execution amid a more stable epilepsy monitoring unit
environment across the last three quarters of the year,” said Mike
Favet, Chief Executive Officer of NeuroPace. “By continuing to
drive awareness of the clinical benefits and differentiated
features of the RNS System and leveraging the strategic benefits of
the DIXI Medical distribution agreement, we are well positioned to
continue these growth trends throughout 2023. We also look forward
to advancing our NAUTILUS pivotal study to expand the indication
for the RNS System into the underserved primary generalized
epilepsy population.”
Fourth Quarter 2022 Financial
ResultsTotal revenue was $12.8 million in the fourth
quarter of 2022, representing growth of 16% compared to the prior
year period and 15% compared to the prior quarter. Initial implant
revenue was $9.8 million, growth of 15% compared the prior year
period and 7% sequentially. Replacement implant revenue was $1.4
million, compared to $2.5 million in the prior year period. The
decrease in replacement implant revenue was expected as patients
continued to transition to the second generation RNS System with a
nearly 11-year battery.
Gross margin for the fourth quarter of 2022 was
69% compared to 73% in the fourth quarter of 2021. The decline in
gross margin was primarily due to the initiation of distributing
DIXI Medical products, which have a lower gross margin than
NeuroPace’s RNS System. The fourth quarter of 2022 was the
Company’s first quarter distributing DIXI Medical products.
Total operating expenses in the fourth quarter
of 2022 were $18.7 million, compared with $17.1 million in the
prior year period. R&D expense in the fourth quarter was $5.1
million compared with $5.3 million in the prior year period. The
decrease in R&D expense was primarily driven by a decrease in
personnel related expenses. SG&A expense in the fourth quarter
of 2022 was $13.6 million compared with $11.7 million in the prior
year period. The increase in SG&A expense was primarily driven
by expenses associated with the DIXI Medical partnership launch and
by personnel related expenses.
Net loss was $11.1 million for the fourth
quarter of 2022, compared to a net loss of $10.7 million in the
prior year period. Interest expense in the fourth quarter of 2022
was $1.9 million, flat compared to the prior year period.
Full Year 2022 Financial
ResultsTotal revenue was $45.5 million in 2022,
representing growth of 1% compared to 2021. Initial implant revenue
was $35.7 million, growth of 6% compared to the prior year.
Replacement implant revenue was $8.2 million, compared to $11.5
million in the prior year. The decrease in replacement implant
revenue was expected as patients continued to transition to the
second generation RNS System with a nearly 11-year battery.
Gross margin for 2022 was 71% compared to 74% in
2021. The decline in gross margin was primarily due to a short-term
supply chain disruption in the second half of 2022 and changes in
the revenue mix with the introduction of sales of DIXI Medical
products in the fourth quarter.
Total operating expenses in 2022 were $73.3
million, compared with $57.2 million in the prior year. R&D
expense in 2022 was $21.9 million compared with $18.2 million in
the prior year. The increase in R&D expense was primarily
driven by an increase in personnel related expenses, product
development, and clinical study expenses. SG&A expense in 2022
was $51.3 million compared with $39.0 million in the prior year.
The increase in SG&A expense was primarily driven by personnel
related expenses, costs associated with the first full year of
operating as a public company, increased sales and marketing costs
to support commercial expansion initiatives, and costs associated
with the DIXI Medical partnership launch.
Net loss was $47.1 million for 2022, compared to
a net loss of $36.1 million in 2021. Interest expense in 2022 was
$7.5 million, compared to $7.4 million in 2021.
Cash, cash equivalents, and marketable
securities were $77.4 million as December 31, 2022, down from $85.4
million as of September 30, 2022; long-term borrowings were $52.9
million as of December 31, 2022. Cash burn in the second half of
2022 decreased to approximately $15 million compared to
approximately $23 million in the first half of 2022, resulting
primarily from cost controls implemented in the middle of 2022.
Full Year 2023 Financial
Guidance
- Total revenue to range between
$50.0 million to $52.0 million, growing approximately 10% to 14%
over 2022
- Gross margin to range between 69%
to 71%
- Total operating expenses to range
between $75.0 million to $77.0 million
NeuroPace expects revenue growth to be primarily
driven by increasing utilization of its RNS System and the full
year impact of the sale of DIXI Medical stereo EEG products,
partially offset by declining revenue from replacement device
implants. NeuroPace expects that replacement implant revenue will
generally continue to decrease through the end of 2023, at which
time NeuroPace expects to have substantially completed the
transition to the second generation RNS System with the longer
lasting battery.
Given the cash balance at the end of 2022 and
NeuroPace’s ongoing efforts to reduce the cash burn rate, NeuroPace
does not believe that it will have a need to raise capital in the
next 12 months.
Webcast and Conference Call
InformationNeuroPace will host a conference call to
discuss the fourth quarter and full year 2022 financial results
after market close on Thursday, March 2, 2023, at 4:30 P.M. Eastern
Time.
Investors interested in listening to the
conference call may do so by accessing a live and archived webcast
of the event at www.neuropace.com, on the Investors page in the
News & Events section. The webcast will be available for replay
for at least 90 days after the event.
About NeuroPace, Inc. Based in
Mountain View, Calif., NeuroPace is a commercial-stage medical
device company focused on transforming the lives of people living
with epilepsy by reducing or eliminating the occurrence of
debilitating seizures. Its novel and differentiated RNS System is
the first and only commercially available, brain-responsive
platform that delivers personalized, real-time treatment at the
seizure source. This platform can drive a better standard of care
for patients living with drug-resistant epilepsy and has the
potential to offer a more personalized solution and improved
outcomes to the large population of patients suffering from other
brain disorders.
Forward Looking StatementsIn
addition to background and historical information, this press
release contains “forward-looking statements” based on NeuroPace’s
current expectations, forecasts and beliefs, including among other
things, the statements related to the stability of the epilepsy
monitoring unit environment, the impacts of NeuroPace’s partnership
with DIXI Medical and the results of our ongoing pivotal study,
supply chain disruptions, and the statements under the caption
“Full Year 2023 Financial Guidance” above. These forward-looking
statements are subject to inherent uncertainties, risks, and
assumptions that are difficult to predict. Actual outcomes and
results could differ materially due to a number of factors,
including the ongoing uncertainty of the impact of the COVID-19
pandemic, as well as COVID recovery impact, on NeuroPace’s
business. These and other risks and uncertainties include those
described more fully in the section titled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operation” and elsewhere in NeuroPace’s public filings
with the U.S. Securities and Exchange Commission (SEC), including
its Quarterly Report on Form 10-Q for the period ended September
30, 2022 and its Annual Report on Form 10-K for the year ended
December 31, 2022 to be filed with the SEC, as well as any reports
that it may file with the SEC in the future. Forward-looking
statements contained in this announcement are based on information
available to NeuroPace as of the date hereof. NeuroPace undertakes
no obligation to update such information except as required under
applicable law. These forward-looking statements should not be
relied upon as representing NeuroPace’s views as of any date
subsequent to the date of this press release and should not be
relied upon as a prediction of future events. In light of the
foregoing, investors are urged not to rely on any forward-looking
statement in reaching any conclusion or making any investment
decision about any securities of NeuroPace.
Investor Contact:Philip TaylorGilmartin
Groupinvestors@neuropace.com
NeuroPace, Inc.Condensed
Statements of Operations(unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(in thousands, except share and per share amounts) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
12,789 |
|
|
$ |
10,997 |
|
|
$ |
45,520 |
|
|
$ |
45,183 |
|
Cost of goods sold |
|
3,986 |
|
|
|
2,921 |
|
|
|
13,027 |
|
|
|
11,748 |
|
Gross profit |
|
8,803 |
|
|
|
8,076 |
|
|
|
32,493 |
|
|
|
33,435 |
|
Operating
expenses |
|
|
|
|
|
|
|
Research and development |
|
5,089 |
|
|
|
5,345 |
|
|
|
21,946 |
|
|
|
18,211 |
|
Selling, general and
administrative |
|
13,573 |
|
|
|
11,746 |
|
|
|
51,341 |
|
|
|
38,961 |
|
Total operating expenses |
|
18,662 |
|
|
|
17,091 |
|
|
|
73,287 |
|
|
|
57,172 |
|
Loss from operations |
|
(9,859 |
) |
|
|
(9,015 |
) |
|
|
(40,794 |
) |
|
|
(23,737 |
) |
Interest income |
|
800 |
|
|
|
186 |
|
|
|
1,578 |
|
|
|
448 |
|
Interest expense |
|
(1,941 |
) |
|
|
(1,862 |
) |
|
|
(7,529 |
) |
|
|
(7,410 |
) |
Other income (expense),
net |
|
(146 |
) |
|
|
(2 |
) |
|
|
(337 |
) |
|
|
(5,381 |
) |
Net loss |
$ |
(11,146 |
) |
|
$ |
(10,693 |
) |
|
$ |
(47,082 |
) |
|
$ |
(36,080 |
) |
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.45 |
) |
|
$ |
(0.44 |
) |
|
$ |
(1.91 |
) |
|
$ |
(2.17 |
) |
Weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted |
|
24,833,355 |
|
|
|
24,166,507 |
|
|
|
24,594,784 |
|
|
|
16,608,800 |
|
NeuroPace, Inc.Condensed
Balance Sheets(unaudited)
|
December 31, |
(in thousands, except share and per share amounts) |
|
2022 |
|
|
|
2021 |
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
6,605 |
|
|
$ |
19,187 |
|
Short-term investments |
|
70,804 |
|
|
|
96,397 |
|
Accounts receivable |
|
7,482 |
|
|
|
7,091 |
|
Inventory |
|
9,712 |
|
|
|
7,822 |
|
Prepaid expenses and other current assets |
|
3,111 |
|
|
|
2,319 |
|
Total current assets |
|
97,714 |
|
|
|
132,816 |
|
Property and equipment,
net |
|
1,064 |
|
|
|
603 |
|
Operating lease right-of-use
asset |
|
14,838 |
|
|
|
— |
|
Restricted cash |
|
122 |
|
|
|
122 |
|
Deferred offering costs |
|
347 |
|
|
|
— |
|
Other assets |
|
21 |
|
|
|
21 |
|
Total assets |
$ |
114,106 |
|
|
$ |
133,562 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
2,147 |
|
|
$ |
1,378 |
|
Accrued liabilities |
|
7,414 |
|
|
|
7,923 |
|
Operating lease liability |
|
1,415 |
|
|
|
— |
|
Total current liabilities |
|
10,976 |
|
|
|
9,301 |
|
Deferred rent, noncurrent |
|
— |
|
|
|
911 |
|
Long-term debt |
|
52,913 |
|
|
|
49,847 |
|
Operating lease liability, net
of current portion |
|
15,440 |
|
|
|
— |
|
Total liabilities |
|
79,329 |
|
|
|
60,059 |
|
Stockholders’ equity |
|
|
|
Common stock, $0.001 par value |
|
25 |
|
|
|
24 |
|
Additional paid-in capital |
|
506,713 |
|
|
|
497,522 |
|
Accumulated other comprehensive loss |
|
(1,108 |
) |
|
|
(272 |
) |
Accumulated deficit |
|
(470,853 |
) |
|
|
(423,771 |
) |
Total stockholders’ equity |
|
34,777 |
|
|
|
73,503 |
|
Total liabilities and stockholders’ equity |
$ |
114,106 |
|
|
$ |
133,562 |
|
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